China’s market regulator on Saturday blocked the merger of Tencent Holdings Ltd (騰訊)-backed game streaming platforms Douyu International Holdings Ltd (鬥魚) and Huya Inc (虎牙) following an anti-monopoly investigation, as authorities ramp up scrutiny of some of the country’s biggest technology companies.
Huya and Douyu — which provide video game livestreaming services akin to Twitch in the US — are two of the largest companies of their kind in China. Both count gaming firm Tencent among their investors.
The Chinese State Administration for Market Regulation said in a statement that a merger between Huya and Douyu would give Tencent control over the merged entity.
Photo: AFP
“From the perspective of different key indicators like revenue, number of active users, resources for streamers, the total share is very substantial and the elimination and restriction of competition can be foreseen,” the statement said.
Authorities have stepped up oversight of some of China’s largest technology firms over concerns of monopolistic behavior and unchecked growth, as well as how companies are collecting and using data from their millions of users.
Also on Saturday, the Cyberspace Administration of China issued draft measures that said companies holding personal information of more than 1 million users must apply for cybersecurity approval if they plan to list abroad.
The agency said in a statement that the review and approval are necessary because of risks that the data could be “affected, controlled and maliciously exploited by foreign governments.”
It also said there is a risk of important data being illegally used or transferred out of the country.
Last week, the regulator ordered a cybersecurity investigation into ride-sharing platform Didi Global Inc (滴滴). The food delivery platform Meituan (美團) is also under an anti-monopoly probe and e-commerce giant Alibaba Group Holding Ltd (阿里巴巴) was fined a record US$2.8 billion earlier this year for antitrust contraventions.
China’s market regulator said the decision to ban the merger between Huya and Douyu is the first instance of regulators prohibiting market concentration in the Internet sector.
The two companies first announced in October last year that they planned to merge, but market regulators later said that they would review the US$6 billion deal.
Tencent said it was notified by the regulator that the merger has been halted.
“The company will abide by the decision, comply with all regulatory requirements, operate in accordance with applicable laws and regulations, and fulfill our social responsibilities,” the company said in a statement.
Earlier last week, Chinese authorities said they would also increase supervision of companies listed overseas.
Under the measures, regulation of data security and cross-border data flows, as well as the management of confidential data, would be improved.
Authorities also plan to crack down on illegal activities in the securities market, and would investigate and punish acts such as the fraudulent issuance of securities, market manipulation and insider trading.
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